It looks like the credit card companies keep winning and the retailers keep losing when it comes to making money on credit cards.
R.K. Hammer, a consulting firm in Thousand Oaks, Calif., estimates that U.S. card issuers will generate $158.6 billion in 2014 revenue, a 9% jump over the $146 billion they earned in 2013. It would be the first annual gain since 2008, according to the firm.
This in a year of record data breaches, including breaches at mega-retailers Target and Home Depot – over 100 million card records breached just across these two retailers.
So what does this tell us? That the data breaches certainly aren’t hurting the card companies. They have done a super job at managing fraud, customer retention and risk mitigation for themselves and their cardholders.
I’d like to see the commensurate numbers for the breached retailers who have taken the hits and paid the fines that contributed to the card issuers’ bottom line profit numbers.
All told data breaches can’t be good for the economy, but on the surface, they haven’t been bad for the banks that issue the cards. I guess the economic equation totally depends on which side of the payment chain you sit on. We already saw the data breach damage Target’s bottom line. I’ve got to assume that’s the same for every major retailer who has been breached this year. All things being equal, these breaches have got to keep retail prices higher than they would be otherwise. But at least we still get our loyalty points and frequent flyer miles on our credit cards. I certainly can’t complain.